Vendor said they would replace parts, but I am not sure which parts are to blame. I made more prints and put a plug on the 5V servo for BLTouch to unplug it from power after print has begun. That prevents it from cycling, but the firmware lockup remains. So either the board or something it interacts with causes the firmware to get confused cycling the BLTouch in the process. I am annoyingly still waiting on parts otherwise I would have thrown the BTT board in there to see if the cause was really BLTouch or something else.

Creality also sent a reply asking for a video, which I supplied them, not sure if I will hear back though, seems to be a busy mail address.

So I am still pretty much in the dark, but hopefully the vendor at least reimburses me for the trouble, cause despite the upgrade plan I still have a partially broken printer on my hands now.